“We made a decision to put Street-Works on notice effective tomorrow . . . that they have not met their benchmarks, they are in default, and they have a 30-day period to resolve those issues,’’ said Koch.

The mayor did not say what will happen if those issues are not resolved. A Land Disposition Agreement governing the overall redevelopment states that if the company defaults, the city’s “sole remedy” is to terminate the agreement.

City solicitor Jim Timmins said Wednesday that the city has several options.

“If Street-Works doesn’t cure [the problems], then their position as a partner in the project is going to be in question,” Timmins said in an interview. “Whether they are terminated or not, we’ll make a decision in 30 days.”

Koch’s comments are the latest blow to Street-Works, which has been working with the city since 2008 on an epic transformation of Quincy Center.

Last week, the mayor and private investors revealed that they were negotiating to remove Street-Works entirely from the first phase of the development, where construction had begun. Now, the company is facing the prospect of removal from the entire project.

Street-Works representatives did not attend Tuesday’s meeting, and did not return calls seeking comment Wednesday.

Progress on the downtown revitalization became tangible last June in the block anchored by 1400 Hancock St., with demolition making way for a residential and retail project named Merchants Row. But signs of distress surfaced in November, when work was halted due to rising construction costs.

Investors Quincy Mutual Group and LaSalle Investment Management now say they will develop that block privately along with Twining Properties.

That left Street-Works to focus on the next phase of the redevelopment, formally called “Step One.” Much larger than Merchants Row, that phase revolves around the Ross Parking Garage, and includes a hotel next to residential, retail, and office buildings.

Koch said planning documents and financial submissions for Step One were due in November, yet no extension was requested and none was given.

“The challenge has always been with Street-Works whether they could come up with the capital, and by not meeting this benchmark, it’s obvious that they are having some trouble getting capital,” Koch said.

If the relationship with Street-Works is terminated, the significance of the Land Disposition Agreement will be thrown into question.

“The question is what will become of Merchants Row and the downtown project?” Councilor Douglas Gutro asked at Tuesday’s meeting. “The LDA . . . is potentially no longer. If default goes through and Street-Works can’t make its commitments . . . what is the new road map? Is [a redevelopment] carved into pieces, a new plan, a new master developer?”

Questions also lingered over how a change might affect pending state funding.

The funding, along with numerous state and federal grants, was necessary for city infrastructure projects crucial to the downtown revitalization. Yet without a transformed district to bring in new tax revenue, it was unclear if the funding would be granted.

“Without getting into specifics because of the 30-day cure period, there are obviously going to be serious discussions on a wide range of issues moving forward,” said Christopher Walker, a spokesman for the mayor.

Koch insisted Tuesday that the changes would not put city money at risk.

For the overall project, the city’s only outlay has been $30 million to create the Walter J. Hannon Parkway. A bond to pay for the parkway will be repaid through new tax revenue.

“We’ve protected the [local] taxpayers. . . . We’re using developer money and an awful lot of federal and state dollars,” Koch said.

That money has already relocated the Town Brook and would fund continuing work on the Adams Green park and design of a Burgin Parkway access bridge, the mayor said. Whatever happens with the project, that infrastructure will eventually make way for a transformed downtown.

“I believe we’ve set the table,” Koch said. “Maybe the dinner guest changed, but the table is set and I believe we will be moving forward, with Street-Works or perhaps without.”

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